Retirement in Australia Now Costs $13,000 More – What Every Senior Should Know

Retirement in Australia isn’t just getting longer — it’s getting a lot more expensive. A new 2025 analysis from the Association of Superannuation Funds of Australia (ASFA) paints a sobering picture: the annual cost of a “comfortable” retirement has jumped to $72,663 for couples and roughly $51,630 for singles, up by around $13,000 in just a year.

That spike represents one of the steepest increases in living costs for retirees in over a decade — and it’s hitting hardest those who depend primarily on the Age Pension or modest superannuation balances. The culprits? Surging healthcare premiums, inflated rents, grocery prices that refuse to cool, and relentless energy costs.

Let’s break down what’s behind the jump — and what retirees can actually do about it.

Retirement Costs Surge: The 2025 Reality

The ASFA Retirement Standard, often used as a benchmark for post-work living costs, tracks the amount retirees need for either a “modest” or “comfortable” lifestyle.

In 2024, a comfortable retirement for couples required around $59,000 per year. Fast forward to 2025, and that figure has ballooned to $72,663 — a rise of roughly 22%. Singles face a similar strain, with their annual expenses rising to about $51,630, up from $41,000 last year.

The increase is largely attributed to:

• Rising private health insurance and out-of-pocket medical costs
• Soaring energy bills
• Higher housing expenses, particularly for retirees still renting
• Sharp upticks in the cost of food, transport, and leisure activities

It’s an uncomfortable truth for many Australians approaching retirement age: the savings target keeps moving further away.

Breakdown of the $13,000 Cost Increase

Here’s how the numbers stack up across major spending categories, according to ASFA and the Australian Bureau of Statistics (ABS) price indexes.

Expense Category	Average Annual Cost (2024)	Average Annual Cost (2025)	Year-on-Year Increase
Healthcare & Insurance	$8,900	$11,200	+ $2,300
Housing (Rent/Mortgage)	$18,500	$21,000	+ $2,500
Utilities & Energy	$4,200	$5,100	+ $900
Groceries & Essentials	$9,000	$10,800	+ $1,800
Transportation	$6,000	$7,500	+ $1,500
Leisure & Other	$12,400	$16,400	+ $4,000

Total Increase: ≈ $13,000 per couple per year

The leisure category — which covers things like dining out, travel, and entertainment — saw one of the largest hikes, reflecting broader price increases and a stronger post-pandemic appetite for lifestyle activities among retirees.

Who’s Feeling the Pinch?

1. Age Pension Recipients

The Age Pension, while recently adjusted for inflation, simply hasn’t kept up with the new reality. A single person on the full pension currently receives roughly $29,000 per year, or about $44,000 for couples — well below ASFA’s “comfortable” benchmark.

For many retirees, this means dipping into savings or cutting back on essentials. As one Melbourne retiree put it: “The pension helps, but between rent and power bills, there’s not much left for groceries.”

2. Self-Funded Retirees

Those relying on superannuation drawdowns are also facing a squeeze. The market’s volatility, coupled with inflation eating into real returns, means retirees must be careful not to withdraw too much too soon. Financial planners are urging retirees to review withdrawal rates, particularly given higher living costs and uncertain investment performance.

Why Costs Are Rising So Fast

The 2025 increase stems from overlapping factors, including:

• Healthcare inflation: Health insurance premiums rose by an average 8.2% this year, the highest jump since 2018.
• Rising rents: National rental prices increased nearly 10%, with seniors in metro areas hit hardest.
• Utility price hikes: Energy regulators in NSW, SA, and QLD approved average increases of 7–9% in 2025.
• Persistent food inflation: Even with easing global supply issues, supermarket staples like fruit, bread, and dairy remain 10–15% higher than pre-pandemic prices.

Combine these, and even retirees with solid nest eggs are finding that “comfortable” feels a lot tighter.

Adapting to the New Cost of Retirement

1. Revisit Superannuation Strategy

Financial advisers recommend reassessing your super drawdown rate — the amount you withdraw each year. The government’s minimum drawdown rates, set by the Australian Taxation Office (ATO), are a starting point, but with costs rising, you may need to adjust.

Consider:

• Seeking a financial planner to balance income needs with long-term sustainability.
• Exploring income streams like annuities to provide stable cash flow.
• Ensuring your investment portfolio remains diversified to hedge against inflation.

2. Tap Into Available Assistance

Centrelink offers a range of supplementary benefits that can soften the blow:

• Energy Supplement
• Rent Assistance
• Low Income Health Care Card
• Concessions on transport, council rates, and utilities

Visit servicesaustralia.gov.au to check eligibility or use the Payment and Services Finder tool.

3. Downsize or Relocate

A growing number of seniors are exploring downsizing — selling their home and moving to smaller, more affordable housing or regional areas. The Home Equity Access Scheme (HEAS), offered through Centrelink, also allows retirees to draw on home equity as a loan to supplement their income.

4. Use Government Budgeting Tools

The MoneySmart platform (moneysmart.gov.au) provides calculators and budget planners to help retirees monitor expenses and avoid overspending amid higher costs.

Expert Insight: Planning for a Pricier Future

Financial experts agree that retirees must now plan for longer lifespans and higher costs. As Fiona Balzer from the Australian Investors Association notes,

“It’s no longer just about saving for retirement — it’s about adapting within it. Prices move faster than most pension increases, so planning has to be ongoing, not static.”

She and others recommend that pre-retirees aim for at least $700,000 in superannuation savings per couple to achieve a comfortable lifestyle in the current economic climate.

The Big Picture

Australia’s ageing population is growing fast, and with it, the challenge of maintaining financial independence. The 2025 surge in retirement costs underscores a simple truth: the Age Pension alone isn’t enough, and careful planning — ideally well before retirement — is essential.

While no one can control inflation, retirees can control how they respond to it: through better budgeting, smarter investing, and fully using the support systems available.

As one retiree in Brisbane summed it up: “You can’t change prices — but you can change how prepared you are.”

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